       UNDERSTANDING ON THE INTERPRETATION OF ARTICLE XVII OF THE
               GENERAL AGREEMENT ON TARIFFS AND TRADE 1994


      Noting that Article XVII provides for obligations on  Members in 
respect of the activities of the state trading enterprises referred to in 
Article XVII:1, which are required to be consistent with the general 
principles of non-discriminatory treatment prescribed in the GATT 1994 for 
governmental measures affecting imports or exports by private traders;

      Noting further that Members are subject to their GATT 1994 obligations 
in respect of those governmental measures affecting state trading 
enterprises;.

      Recognizing that this Understanding is without prejudice to the 
substantive disciplines prescribed in Article XVII;

1.    It is agreed that in order to ensure the transparency of the 
activities of state trading enterprises, such enterprises shall be notified 
to the Council for Trade in Goods, for review by the working party to be set 
up under paragraph 5 below, in accordance with the following working 
definition:

      "Governmental and non-governmental enterprises, including marketing 
      boards, which have been granted exclusive or special rights or 
      privileges, including statutory or constitutional powers, in the 
      exercise of which they influence through their purchases or sales the 
      level or direction of imports or exports."

This notification requirement does not apply to imports of products for 
immediate or ultimate consumption in governmental use or in use by an 
enterprise as specified above and not otherwise for resale or use in the 
production of goods for sale.

2.    It is agreed that each Member shall conduct a review of its policy 
with regard to the submission of notifications on state trading enterprises 
to the Council for Trade in Goods, taking account of the provisions of this 
Understanding.  In carrying out such a review, each Member should have 
regard to the need to ensure the maximum transparency possible in its 
notifications so as to permit a clear appreciation of the manner of 
operation of the enterprises notified and the effect of their operations on 
international trade.

3.    Notifications shall be made in accordance with the 1960 questionnaire 
on State trading (BISD, 9S/184), it being understood that Members shall 
notify the enterprises referred to in paragraph 1 above whether or not 
imports or exports have in fact taken place.  

4.    Any Member which has reason to believe that another Member has not 
adequately met its notification obligation may raise the matter with the 
Member concerned.  If the matter is not satisfactorily resolved it may make 
a counter-notification to the  Council for Trade in Goods, for consideration 
by the working party set up under paragraph 5 below, simultaneously 
informing the Member concerned.    
5.    A working party shall be set up, on behalf of the Council for Trade in 
Goods, to review notifications and counter-notifications.  In the light of 
this review and without prejudice to Article XVII:4(c), the Council for 
Trade in Goods may make recommendations with regard to the adequacy of 
notifications and the need for further information.  The working party shall 
also review, in the light of the notifications received, the adequacy of the 
1960 questionnaire on state trading and the coverage of state trading 
enterprises notified under paragraph 1 above.  It shall also develop an 
illustrative list showing the kinds of relationships between governments and 
enterprises, and the kinds of activities, engaged in by these enterprises, 
which may be relevant for the purposes of Article XVII.  It is understood 
that the MTO Secretariat will provide a general background paper for the 
working party on the operations of state trading enterprises as they relate 
to international trade.  Membership of the working party shall be open to 
all Members indicating their wish to serve on it.  It shall meet within a 
year of the entry into force of the Agreement Establishing the MTO and 
thereafter at least once a year.  It shall report annually to the Council 
for Trade in Goods.[1]



1. The activities of this working party shall be co-ordinated with those of 
the working group provided for in section III of the Ministerial Decision on 
Notification Procedures.



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